Navamalar for the Applicant Joint Liquidator v Mong Chun Seng and Chia Oh Sheng for RHB Bank Berhad (POST WINDING UP NO. WA-28PW-446-11/2020)

In the Notice of Motion (Motion) before this Court, the liquidator, Datuk Duar Tuan Kiat (Applicant), of the company in liquidation, Sineo Enterprise Sdn Bhd (In Liquidation) (Company) had applied to this Court pursuant to section 490 of the Companies Act 2016 and rule 149 & 150 of the Companies (Winding Up) Rules 1972 and/or the inherent jurisdiction of the court for inter alia the following:

that the Applicant be released forthwith as one of the joint liquidators of the Company;

(ii) that the summoning of separate meetings of creditors and contributories of the Company to consider the resignation of the Applicant pursuant to rule 150 of the Companies (Winding Up) Rules 1972 be dispensed with;

(iii) that the remuneration of the Applicant as the liquidator of the Company and legal fees incurred in the course of the liquidation administration shall be taxed and paid out of the proceeds from the charged assets of the Company;

(iv) that directions maybe given that an advertisement in respect of the discharge and/or release of the Applicant as the liquidator of the Company be inserted once in any national newspaper within 14 days from the date of an Order by this Court pursuant to the application filed herein 3

For the record, none of the Chargee Banks, which are described below, are objecting to the release of the Applicant as a Joint Liquidator but only objects to the fee claimed by the Applicant

At the request of the Company, UMBC and UMBC Finance Berhad had granted banking facilities to the Company which are secured over a property held under GRN 530153 Lot 59592 Mukim Pulai Johor Bahru together with the buildings erected upon it (Charged Property).

The Company was a developer of Skudai Parade Commercial Complex and Skudai Parade Apartment which consisted of a commercial complex and 2 blocks of apartments , as well as a car park space consisting of 1,071 parking bays on the Charged Property.

The assets and liabilities of UMBC and UMBC Finance Berhad were subsequently vested with RHB Bank Berhad and Malayan Banking Berhad (Chargee Banks).

Various units Skudai Parade Commercial Complex and Skudai Parade Apartment were previously redeemed from RHB Bank Berhad and it is only the unsold units of Skudai Parade Commercial Complex and Skudai Parade Apartment which are still charged to the Chargee Banks (Charged Assets). 4

The Company was wound up on 9.8.2011 and the Official Receiver was appointed as the Provisional Liquidator of the Company.

Upon the application of RHB Bank Berhad and by a Consent Order dated 7.10.2011, this Court made an order for inter alia the appointment of liquidators of the Company as follows:- i. Dato Dr Chua Hock Hoo of Messrs Cheng & Co Corporate Recovery Sdn Bhd ii. Dato Adam Primus Varghese Bin Abdullah; and iii. the Applicant, both of Messrs. Ernst & Young PLT to be appointed a joint liquidators of the Company subject to the terms of the letter dated 6.10.2011 from Messrs. Ernst & Young to Messrs Cheng & Co Corporate Recovery Sdn Bhd.

Dato Adam Primus Varghese Bin Abdullah was subsequently released as one of the joint liquidators of the Company by way of Court Order dated 26.11.2012.

The Applicant has now filed the motion to be released as one of the joint liquidators of the Company and seeks that payment for all works and services rendered to be taxed and paid out of the charged assets of the Company.

As the Charged Assets have not been sold, RHB Bank Berhad has proceeded with foreclosure proceedings and obtained an Order For 5 Sale dated 15.1.2018 which has since come up for auction on 4 occasions but there has been no bidder.

The Applicant submits inter alia that: a) in carrying out his duties during the course of the liquidation administration, significant time and effort have been expended to procure a purchaser and offers for the Charged Assets with a view to complete the sale transaction b) after a period of 9 years a sale has yet to be concluded due to various challenges faced including where 4 offers had been accepted from 3 parties at separate times but efforts to complete the respective sale transactions were aborted due to various reasons c) the current reserved price of the Charged assets are now much lower than the original offer that the Applicant had received d) he has made the best efforts in the course of the liquidation administration for sale of the Charged Assets and that at all material times the Chargee Banks were informed and updated of the progress of sale if the Charged Asserts and was aware of the efforts and work done 6 e) due to the current Covid 19 pandemic and current market conditions, the Joint Liquidators are unable to obtain any other offers f) there has always been a shortage of funds to manage the Skudai Parade Commercial Complex and on a couple of occasions, the Chargee Banks and the Company have provided additional funding g) recently the Chargee banks had confirmed that they will not provide any further funding which will make it difficult for anyone including the Joint Management Body (JMB) and their agents, Sineo Management Apt Sdn Bhd to maintain the complex h) there are unresolved issue between the JMB and their agents i) in light of what has happened and the fact that the Applicant‟s recommendation was not accepted by the Chargee banks, it has made it impossible for the Applicant to continue as a joint Liquidator j) a Notice of Discharge dated 16.10.2020, have been given to the Chargee Banks and that they have no objections to the same k) it cannot be denied that the Applicant had throughout the liquidation administration not received any remuneration although he had made numerous recommendations to the Chargee Banks for the offers received with regards the Charged Assets 7 l) the Applicant has also incurred solicitors fees in respected of the aborted sale transaction vis a vis the Charged Assets m) the Applicant has at all material times liaised and informed RHB Bank Berhad by letter dated 10.5.2012 on the remuneration of the applicant

It is further submitted by the Applicant that he is only seeking for the payment of remuneration for works rendered upon realization of the Charged Assets i.e that the Court grants an order that the remuneration of the Applicant be taxed and paid out of the proceeds from the Charged Assets of the Company, as the arrangement with the Chargee banks was predicated on fee based on realization of the Charged Assets which remains unsold todate.

The Applicant contends despite all the work and effort done, there is no realization of the Charged Assets and that it will be futile for the Chargee Banks to maintain that fees is based on the gross realization value of the Charged Assets.

RHB Bank Berhad denies the Applicant‟s suggestion that they have made it impossible for him to continue with the liquidation of the Company and that they have at all material times facilitated the proposed sale of the Charged Assets but the same did not 8 materialize due to the prospective purchasers inability to complete the purchase of the Charged Assets.

It is submitted by RHB Bank Berhad inter alia that:

the latest offer received by the Applicant was insufficient to settle the debt secured by the Company

(ii) RHB Bank Berhad is not obliged to provide any further funding to the Applicant but had only done so previously but had only accommodated to his requests previously and had advanced a sum of RM2,137,831.15 to maintain the Charged Assets

(iii) todate they have not recovered any part of the debt due and owing by the Company

RHB Bank Berhad contends that the Applicant is not entitled to claim for his remuneration, legal expense and costs of the Motion from the proceeds of sale of the Charged Property / Assets save and except there is a surplus from the proceeds of sale of the Charged Property after the debt due and owing by the Company to them are fully settled. Court’s Findings Law 9

As a start, the governing law on the release of a liquidator can be found in Section 490 of the Companies Act 2016 which reads:- A liquidator may apply to the Court:

for an order that he be released and that the company be dissolved, if he has:

realised all the property of the company or so much as in his opinion can be realised without needlessly protracting the liquidation;

(ii) distributed a final dividend, if any, to the creditors;

(iii) adjusted the rights of the contributories among themselves; and

(iv) made a final return, if any, to the contributories, or

for an order that he be released, if he has resigned or been removed from his office

Following from the above and the Motion, the Court herein has to determine inter alia if the liquidation administration fees, costs and expenses of the Applicant should be taxed and to be paid out of the proceeds from the Charged Assets once the same has been realized.

This court has viewed the letter dated 6.10.2011 from Messrs. Ernst & Young to Messrs Cheng & Co. Corporate Recovery Sdn Bhd (6.10.2011 Letter) at exhibit DTK-2 of the Applicants Affidavit In Support at enclosure 2 which formed the basis of the Applicant‟s 10 appointment as a joint liquidator of the Company. The salient part of the said letter can be found at the second paragraph thereto which states as follows: “An agreement is to be reached with RHB Bank Berhad to cover the fees of the Liquidators or for the said fees to be borne from the realization of the charged assets of SESB based on a percentage of the gross realisation of the charged assets concerned”

I have further examined the Order of Court dated 7.10.2011 at exhibit DTK-2 of the Applicants Affidavit In Support at Enclosure 2.

This Court has also examined the Notice of Discharge dated 16.10.2020 to the Chargee Banks at exhibit DTK-6 of Enclosure 2 in which inter alia the Applicant outlined the Applicant‟s work done and services rendered as well as the fact that it would be difficult for him to continue as a Joint Liquidator in light of the Chargee Banks position of no further funding coupled with the ongoing issues faced between the JMB and their agent. The said Notice had also notified that the Applicant had incurred time costs over a period of 9 years in administration of the Company and had previously proposed in his letters dated 21.2.20220 and 7.4.2020 and at a meeting on 13.3.2020 that they had incurred time costs and proposed an interim fee of RM1.5 million and “we do hope that the Chargee banks will still consider this fee request”.

From a reading of the 6.10.2011 Letter, it is my finding that the Joint Liquidators had agreed that their fees were either to be agreed with 11 RHB Bank Berhad or for the said fees to be borne from the realization of the Charged Assets on a percentage of the gross realization value of the Charged Assets.

It is also my finding that the Order of Court dated 7.10.2011 at exhibit DTK-2 had specifically and expressly referred to the 6.10.2011 Letter, which was annexed as Annexure A to the said Court Order, as the basis of the appointment of the Joint Liquidators. From these evidence, it is thus obvious that the 6.10.2011 Letter forms the terms of the Joint Liquidators, which includes the Applicant herein.

After examining the Notice of Discharge dated 16.10.2020 to the Chargee Banks at exhibit DTK-6 of Enclosure 2, this Court finds that Joint Liquidators had not agreed and/or concluded an agreement of the Joint Liquidators fees with RHB Bank Berhad as the contents of the said Notice of Discharge dated 16.10.2020 had contained a plea from the Applicant as to his fees to be considered by the words “we do hope that the Chargee banks will still consider this fee request” which indicates in the view of this Court that no fee agreement was reached with RHB Bank Berhad. If the same were otherwise, then the Applicant would surely have expressly and unequivocally mentioned the fee agreement in the said Notice of Discharge dated 16.10.2020 without the need to request or plea for his fee to be considered.

This then leaves the issue of the alternative fee structure in the Notice of Discharge dated 16.10.2020 being the said fees to be 12 borne from the realization of the Charged Assets on a percentage of the gross realization value of the Charged Assets.

In coming to my decision herein, I have also looked at the Applicant‟s letter dated 10.5.2012 addressed to RHB Bank Berhad (10.5.2012 Letter) entitled “Sineo Enterprsie Sdn Bhd (In Liquidation) (SEB), Update on Sale of SESB‟s Assets” at exhibit DTK-11 of the liquidators Affidavit in Reply (1) at Enclosure 6, in particular paragraphs 20, 25 and 26 therein under the heading “Liquidators Fees and Expenses” wherein the salient parts state as follows: Para 20 “Based on the scope of work involved to realise the Assets and to ensure the operations of the Skudai Parade Shopping Complex are maintained …we set out below our professional fees for acting as Liquidators of SESB for the purpose of mutual records:….” Para 25 “The fees proposed above are estimates only. Situational complexities may arise resulting in higher fees and cists being incurred by us. If at any time during the course of the assignment we find that our fees proposed is materially inadequate due to circumstances beyond our control resulting in more tome being expended than anticipated, we shall inform your Bank thereof with the view to amicably re-negotiate the agreed fees separately with you… ” 13 Para 26 “If for any reason our appointment is suspended or terminated before the realization or distribution of assets, we would be rendering an account for fees and expenses up to the time based on actual time costs incurred plus all out of pocket expenses expended on the assignment for payment within fourteen(14) days of our bill”

From the said 10.5.2012 Letter, it is my finding that the contents and the terms therein indicate as follows:- a) the letter was an update the work done by the Applicant and the status including recommendations at paragraph 17 on the sale of SESB‟s Assets b) RHB Bank Berhad did not acknowledge and or sign off any acceptance on the said letter to the terms contained therein c) Paragraph 26 therein was only applicable where the Applicant‟s services were either „suspended or terminated‟ and not upon the occurrence of either the resignation and/or discharge of the Applicant‟s appointment prior to realization or distribution of assets

I further hold that from the facts before me, that the Applicant is not entitled to the retainer fee referred to in paragraph 20 of the 10.5.2012 Letter to maintain the operations of the Skudai Parade Commercial Complex as he has not been managing the same which is evident from the fact that the said Skudai Parade 14 Commercial Complex was being managed by the Joint Management Body (JMB) and/or their agents, Sineo Management Apt Sdn Bhd as averred to in paragraph 10 of the Applicant‟s Affidavit In Reply (2) at Enclosure 8.

This Court was also urged by Counsel for RHB Bank Berhad to consider that the 10.5.2012 Letter provides that in the event of a situational complexity, the Applicant „shall inform RHB to amicably negotiate the agreed fee’ which shows any subsequent variation of the agreed fees must be with the agreement of RHB Bank Berhad and in this regard RHB Bank Berhad are unable to agree to the interim fee or time costs sought by the Applicant. I find there is merit in such an argument and I do hold that an entire reading of the said 10.5.2012 Letter as a whole does in my view evidence that there is no agreement by RHB Bank Berhad as to not only to the variation of an agreed fee but a lack of any agreement as to the agreed fee itself.

I have also viewed the letter dated 15.12.2020 entitled “Sineo Enterprise Sdn Bhd (In Liquidation) (SESB) Resignation and Discharge of Liquidator” from the Applicant to RHB Bank Berhad (Applicant‟s 15.12.2020 Letter) at exhibit DTK 12 of enclosure 6 which made reference to a letter dated 18.11.2020 from RHB Bank Berhad which set out the detailed breakdown of the time costs incurred and particulars of work done. I have in this respect also perused RHB Bank Berhad letter dated 18.11.20 (RHB 18.11.20 Letter) at exhibit A-16 of the affidavit of Lai Chwen Huey for and on behalf of RHB Bank Berhad at Enclosure 4 where RHB Bank Berhad. 15

In the RHB 18.11.20 Letter at at exhibit A-16 in paragraph 4 thereto it is stated inter alia that, and I quote, “We will consider and discuss with Malayan Banking Berhad and our management on your fee request upon receipt of your response and the information required”. Thus, based on a reading of the RHB 18.11.20 Letter, in particular paragraph 4 thereto in the RHB 18.11.20 Letter, the Applicant‟s 15.12.2020 Letter and the 10.5.2012 Letter, Order of Court dated 7.10.2011 as well as all other documents or notices or letters mentioned, it is my finding that from a proper interpretation of the said Order of Court dated 7.10.2011, letters and/or documents, no agreement was reached by the Applicant and RHB Bank Berhad as regards any fee arrangement and that the Applicant and RHB Bank Berhad appears to still be negotiating the terms of the fee arrangement i.e there was no concluded or binding agreement between the Applicant and RHB Bank Berhad.

Authority for the same can be found in the Supreme Court case of Kam Mah Theatre Sdn Bhd v Tan Lay Soon [1994] 1 MLJ 108, delivered by Peh Swee Chin SCJ, where their Lordships had stated: “First, about the propriety of evidence, oral or otherwise of surrounding circumstances, background and negotiations between parties in a case like the instant one, such evidence is admissible and relevant to show that there was no contract at all or in other words,(empahisis mine) there was no concluded and binding agreement at all, for ss 91 and 92 of the Evidence Act 1950 merely strike at evidence to contradict, vary, etc, the terms of an established contract, for in that event, such evidence would 16 be unacceptable. The position generally is the same in England for an established contract, thus, eg in Prenn v Simmonds, 1 Lord Wilberforce said (at p 1385): 'In my opinion, then, evidence of negotiations or of the parties' intentions … ought not to be received…'. For correspondence that passed after the date of the said document, it was relevant also, for in finding whether there was any contract at all, the court must look at the correspondence as a whole, please see decision of House of Lords in Hussey v Horne-Payne 2 (at p 316). Speaking about such surrounding circumstance in the Privy Council in Daiman Development Sdn Bhd v Mathew Lui Chin Teck & Anor, 3 Sir Garfield Barwick said [at p 58]: The question whether parties have entered into contractual relationships with each other essentially depends upon the proper understanding of the expressions they have employed in communicating with each other considered against the background of the circumstances in which they have been negotiating, including in those circumstances the provisions of any applicable law. Where they have expressed themselves in writing the proper construction of the writing against that background will answer the question. Against such background of surrounding circumstances, the said document would have to be considered and construed for its proper meaning and effect, the most important aspect being the proper interpretation of the said document itself. (emphasis mine)

Be that as it may, section 479 of the Companies Act 2016 deals with the remuneration of the liquidator and provides that he is entitled to 17 remuneration by way of percentage or as otherwise determined by agreement between the liquidator and committee of inspection, or by resolution passed at a meeting of creditors with a majority of three-fourths in value and one half in number of the creditors, and failing either of these circumstances, at the behest of the Court.

Perumahan NCK Sdn. Bhd. v. Mega Sakti Sdn. Bhd. [2005] 1 LNS 162; [2005] 7 MLJ 389 sets out comprehensively the law in relation to the previous section 232(3) of the Companies Act 1965 (now section 479(2) of the Companies Act 2016) and Rule 142(3) of the Companies (Winding Up) Rules 1972, where Ramly Ali J(as he then was) held as follows: “15 It is clear that under s 232(3) of the Companies Act 1965 and Companies (Winding Up) Rules 1972r 142(3) of the Companies (Winding Up) Rules 1972, Liquidators are entitled to be paid remunerations for their works done on behalf of the court and the court has jurisdiction to determine the liquidators remunerations. 16 In Nationwide News Pte Ltd v Samalot Enterprises Pty Ltd (1986) 4 ACLC 366 at p 389, Mc Lelland J (Supreme Court of New South Wales) held: Section 373 confers on a liquidator a statutory entitlement to remuneration and confers on the court a statutory power to determine that remuneration, neither of which appointing the liquidator but only upon the liquidator's status as such. 17 The learned judge in that case further said: 18 Furthermore, I have little doubt that a liquidator, or provisional liquidator who is entitled to remuneration would normally have an equitable lien over the assets under his administration to secure payment of that entitlement, analogous to the lien to which a court appointed receiver is entitled… 18 Section 373 of the Companies (New South Wales) Code is in pari material with s 232 of the Malaysian Companies Act 1965. 19 In Re Wun Rose & Co (1897) 3 ALR 65, it was held that a liquidator is entitled to a reasonable remuneration for his services in winding up the company. In Re Perdana Merchant Bankers Bhd [1997] 3 MLJ 435 at p 466, Abdul Malik Ishak J held, that: Three instances exist where the liquidator may lose his remunerations. Firstly, when he is deprived of his remuneration on the ground of misconduct Secondly, where the assets are insufficient to meet his remuneration (Re Massey; Re Freehold Land & Brickmaking Co (1870) LR 9 Eq 367 and Resanitary Burial Association [1900] 2 Ch 289). Thirdly, where his appointment is defective (Re Allison Johnson & Foster Ltd [1904] 2 KB 327 (CA) as applied in Re Kyra Nominees Pty Ltd (1980) 5 ACLR 60). 20 Generally, a liquidator is not entitled to be paid until the liquidation is completed to the core (see Re New Zealand Times

From the principles in Perumahan NCK Sdn. Bhd (supra) and section 479 of the Companies Act 2016 read together with Rule 142(3) of the Companies (Winding Up) Rules 1972, I hold that despite my above said finding and the chronology of events, 19 peculiar facts and circumstances of the matter before me, which includes an admission by the Applicant that his fee was predicated on a realization of charged asset, as seen in paragraph 17 of his Affidavit in enclosure 2, the Applicant as Liquidator is entitled to some form of remuneration for his efforts and work done on behalf of the court and that this court has the jurisdiction to determine the Applicant‟s remuneration during his tenure as the Joint Liquidator in the liquidation process before me.

This Court will now address the case of Ong Kwong Yew & Ors v Ong Ching Chee & Ors [2018] 1 LNS 2247 cited by counsels for both parties herein relating to numerous appeals on the issue of the liquidator‟s remuneration as well as the discharge and release of a liquidator, one Yew Fooi, arising subsequent to his removal as the liquidator of five companies.

The facts of the said case show that on 24 September 2014, some five months after his appointment as liquidator, the minority contributories filed applications in the winding up court in respect of each of the wound up companies, seeking the removal of the liquidator. The liquidator sought an expeditious disposal of the sale of the remaining assets of OCC Capital and OCC Realty, including the shares in Sri Jenjarom. However, in the light of the removal applications which were pending, the liquidator gave an undertaking to defer his decision on the expression of interest received in respect of the sale of those assets pending the disposal of the removal applications, provided the same were disposed of on or by 20 October 2014. In July 2015, the liquidator filed an application for release as a liquidator and for the dissolution of OCC Capital. Thereafter on 23 March 2016. the liquidator was removed from each of the five companies and the decision by the High Court to remove Yew Fooi as liquidator was premised on inter alia there was evidence of bias in his handling of the sale of the business of two of the companies. Appeals were then filed by both the majority group and the liquidator against the removal order.

The Court of Appeal in Ong Kwong Yew & Ors (supra) then held inter alia as follows:- “..to allow the liquidator's claim for remuneration for a sale that has not gone through and to subsequently allow remuneration for any sale that now transpires through the current liquidator, will effectively mean that a double charge is incurred. To that extent, the claim requires review. …. Rule 142(1)(i) of the Companies (Winding Up) Rules 1972 provides that the remuneration of a liquidator is premised on the amount realised. This refers to actual monies received and not potential or possible amounts to be recovered in the future. [72The Injunction appeals are allowed because they comprise the natural consequence of the finding that the liquidator was not entitled to draw monies by way of remuneration as he deemed fit. Those bills require review and /or taxation by the Court. As such it is only correct that any monies wrongfully retained by the liquidator are paid back to the companies, and if allowed, bills tendered to the Court for a full taxation exercise” 21

After a careful examination of Ong Kwong Yew & Ors (supra), I am thus of the view that as a matter of law, a liquidator‟s remuneration based on the nature of a commission or percentage is only permissible and premised on the amount realised, if any, at the time of his discharge or release as a liquidator and not to amounts to be recovered in the future. In short as far as the matter before me is concerned, the Applicant cannot therefore have recourse to the proceeds of sale of a charged property which has yet been sold for their remuneration and costs.

I have in my decision herein also considered the provisions of both Section 479 and Section 527(1) of the Companies Act 2016 respectively which provides:-

A liquidator other than the Official Receiver shall be entitled to receive such salary or remuneration by way of percentage or otherwise as is determined by:

an agreement between the liquidator and the committee of inspection, if any;

where there is no agreement or where there is no committee of inspection, a resolution passed at a meeting of creditors by a majority of not less than three-fourths in value and one-half in number of the creditors present in person or by proxy and voting at the meeting and whose debts have been admitted to vote, 22 which meeting shall be convened by the liquidator by a notice to each creditor to which notice shall be attached a statement of all receipts and expenditure by the liquidator and the amount of remuneration sought by him; or

if the agreement or determination under paragraph (a) or

fails, the Court.

Subject to this act, in a winding up there shall be paid in priority to all other unsecured debts:

firstly, the costs and expenses of the winding up including the taxed costs of a petitioner payable under section 468, the remuneration of the liquidator and the costs of any audit carried out under section 514;

I agree with the RHB Bank Berhad counsel that section 527(1) of the Companies Act 2016 provides that a secured creditor‟s claim must first be paid in preference over the unsecured creditors which include the Applicant as joint liquidator of the Company, as per the authority in the Supreme Court case of Customs Federal Territory v Ler Cheng Chye (Liquidator of Castwell Sdn Bhd)(In Liquidation)(1995) 3 CLJ 316 which held that: “The status of a secured creditor in our companies winding-up is spelled out in s. 291(2) of our Companies Act 1965 (the previous equivalent provision of the present section 527(1) of the Companies Act 2016” 23

This Court also upholds that rule 142 of the Companies (Winding Up) Rules 1972 makes it clear that the remuneration of a liquidator is after deducting the sums (if any) paid to secured creditors (other than debenture holders) out of the proceeds of their securities. The said Rule 142 reads as follows:

The remuneration of a liquidator, unless the Court shall otherwise order, shall be fixed by the committee of inspection, and shall be in the nature of a commission or percentage of which one part shall be payable on the amount realized, after deducting the sums (if any) paid to secured creditors (other than debenture holders) out of the proceeds of their securities, and the other part on the amount distributed in dividend.

Based on the authority of Ler Cheng Chye (Liquidator of Castwell Sdn Bhd)(In Liquidation) (supra) and rule 142 of the Companies (Winding Up) Rules 1972 it follows that the Applicant as a liquidator is only entitled to his claim for his remuneration, legal expense and costs of the Application from the proceeds of sale of the Charged Property / Assets only where there is a surplus from the proceeds of the sale of the Charged Property after the debt due and owing by the company to the Chargee banks are fully settled.

I would also refer to the Federal Court authority of K Balasubramaniam, Liquidator For Kosmopolitan Credit & Leasing Sdn Bhd (In Liquidation) V MBf Finance Bhd & Anor [2005] 2 MLJ 201 wherein the Federal Court in deciding the provisions regarding the custody and vesting of the company‟s of 24 property and delivery of property to a liquidator under sections 233(1) and 277(5) of the previous provisions of the Companies Act 1965 pertaining to the same, and which are now found in Sections 483 and 511 of the present Companies Act 2016, had held as follows: “31 To conclude ss 233(1) and 277(5) of the Act have no application where assets form part of an equitable charge as the second respondent have a legal right to possess them pursuant to the terms of the debenture. By operation of law those assets are no longer assets to which KCL is or appears to be entitled to or prima facie entitled unless they are first redeemed from the first respondent. By reason of ss 233(1) and 277(5) their retention by the second respondent does not fall within the penal provisions of s 300(1)(b)(ii). On the facts of this appeal, s 305(1) if at all, can only apply after the whole debt due to the first respondent has been settled in full from the proceeds realized by the second respondent and if there should be any surplus and the second respondent chose to retain the surplus or failed to account, only then will the second respondent come within the ambit of s 305 (emphasis mine).”

It is thus settled law following from all of the above that the Charged Property is not an asset of the Company and the Applicant can only be entitled to the surplus proceeds of sale of the Charged Property / Assets.

25

In any event, based on this Court‟s finding that there has been no concluded fee agreement between RHB Bank Berhad, this Court hereby holds that the Applicant is not entitled to charge his remuneration, legal expense and costs of the Motion from the proceeds of sale of the Charged Property / Assets on a „realisation basis‟ in the event the Charged Property is successfully sold but the Applicant shall be entitled to a reasonable remuneration for his services in winding up the company subject to bills tendered to the Court for a full taxation exercise which shall be payable only upon there being a surplus proceeds of sale of the Charged Property / Asset after the whole debt due to the Chargee Banks have been settled in full from the proceeds as and when they are eventually realized.

This Court henceforth grants order in terms for prayers (1), (2), (3) and (5) of the Motion and that prayers (4) and (6) of the Motion is hereby dismissed. This Court further directs that the Applicant herein in accordance with prayer (7) of the Motion tender such bills as are necessary to the Court for a full taxation exercise of the Applicant‟s remuneration, legal expense and costs. I further award costs of RM5,000.00 to be paid by the Applicant personally to the Chargee Banks after hearing the parties submit on the issue of costs. Dated: 10th day of June 2021 sgd. NADZARIN WOK NORDIN JUDICIAL COMMISSIONER KUALA LUMPUR HIGH COURT 26 Parties: Navamalar for the Applicant Joint Liquidator [Messrs Anad & Noraini] Mong Chun Seng and Chia Oh Sheng for RHB Bank Berhad [Messrs Lee Hishamuddin, Allen & Gledhill]